The pending acquisition deal between Microsoft and Activision Blizzard continues to hit roadblocks across the pond in the European Union. The latest chapter in this conflict will now see an EU commission open an in-depth investigation into the deal, as the EU is citing concerns over lack of competition, specifically in regards to non-Windows PCs.
The following statement was issued by the European Union commission (bold emphasis ours):
The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-vis Microsoft's rival distributors of console video games, such as preventing these companies from distributing Activision Blizzard's console video games on consoles or degrading the terms and conditions for their use of or access to these video games.
When it comes to multi-game subscription services and/or cloud game streaming services in particular, the Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access, to the detriment of its rival distributors of console and PC video games that offer such services, to its own PC and console video games, which are key for the provision of the nascent services of multi-game subscription and cloud game streaming.
Such foreclosure strategies could reduce competition in the markets for the distribution of console and PC video games, leading to higher prices, lower quality and less innovation for console game distributors, which may in turn be passed on to consumers.
Finally, at this stage of the investigation, the Commission has concerns that the proposed acquisition may reduce competition on the market for PC operating systems. In particular, the Commission is concerned that Microsoft may reduce the ability of rival providers of PC operating systems to compete with Microsoft's operating system Windows, by combining Activision Blizzard's games and Microsoft's distribution of games via cloud game streaming to Windows. This would discourage users to buy non-Windows PCs.
The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in such conduct vis-à-vis rival providers of PC operating systems.
As of now, there is no response from Microsoft or Xbox leadership to the investigation announcement. From Activision Blizzard's end, CEO Bobby Kotick issued a response (via PC Gamer) stating, "As we said when we announced our merger, this is a long process. We have already received approvals from countries including Brazil. After a close review of the transaction, the Brazilian authority arrived at the understanding that we operate in a highly dynamic and competitive industry, and that the merger will not harm competition in any way."
The EU commission will have until March 23, 2023 to conclude its investigation and make a decision. Even if the EU ultimately sides with Microsoft, there are still issues with UK regulators and the Federal Trade Commission to sort out before the acquisition can be finalized. This story will continue to unfold throughout 2023, so keep it on Shacknews. We'll be sure to return with any updates.